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Coverage from Crain’s Manufacturing Summit 2014 – Part II

On May 20, 2014, Crain’s hosted its annual manufacturing summit in downtown Chicago. The full-day event focused on the state of manufacturing in the Midwest and the challenges that the industry is faced with. With more than 240 area executives in attendance, a lot of ground was covered during the event. So much so that our coverage was divided into two parts, beginning with the morning sessions, which were driven by Louis Schorsch, the CEO of ArcelorMittal Americas, and Chicago Mayor Rahm Emanuel.

Working off of their momentum, the members of the morning panel, manufacturing for growth, discussed labor issues shared by many in the industry. The four speakers included Charles Demirjian from T/CCI Manufacturing Group LLC, Barry MacLean from MacLean-Fogg Co., Laurette Rondenet-Smith from Edlong Dairy Technologies and John O'Brien from O'Brien Metal Inc. Julio Ottino from Northwestern University served as moderator.

Removing the stigma from blue collar jobs

With a focus on products that are suitable for automation and removing labor from the equation, the panel members discussed the technologies that are emerging in that regard. They also reminisced the days when labor made up the bulk of expenses. Today, however, technology is able to bring labor costs down on a regular basis, leaving the United States as extraordinarily competitive and with great export opportunities. Automation, however, doesn’t happen overnight.

The investment in automation can be significant and then finding qualified labor to manage those investments can also be difficult. Although less labor is required, it is more specialized labor that is needed. One of the panel members equated the process to flying an airplane. Once the pilot has taken off, the big job is to monitor the controls and land the plane. So for the most part, the bulk of the work revolves around programming the equipment, and it takes the right person to do that.

Luckily, the stigma of blue collar is much different today than it has been in the past. Even MBAs want to "make stuff," and they’re seeing a rise in salaries in manufacturing because it’s not as labor intensive or "back-breaking" as it used to be. Instead, it’s about sophisticated technology and state-of-the-art automation. But that doesn’t mean that there aren’t still hurdles to overcome.

There is a lack of understanding of what manufacturing is or more importantly, what it can be. In that regard, the panelists questioned whether the industry needs a better marketing campaign to broadcast the positive changes that are happening on the manufacturing floor.

Beyond the need to better broadcast the manufacturing message, issues such as steel prices and local taxes compound the challenges faced by those in the Midwest. Regardless of those challenges, Rondenet-Smith from Edlong Dairy expressed her love for the Midwest in terms of access to the commodities that her business needs as well as the education and work ethic that the Midwest produces. Nobody works harder than a farmer, she reminded the audience.

But taxes play a big role when businesses start talking about expanding their operations or relocating. When lawmakers in Illinois continually debate how to raise taxes, southern states begin to look much more attractive – despite the roots that many of these companies have established in the Midwest area.

Finding ways to circumvent the tax issue typically leads the conversation back to technology and the labor pool. Although the panelists believe that it is their responsibility to improve the perception of working in a manufacturing environment, they also agreed that universities and colleges can help drive the cause. Internships were presented as a great way to give students a better idea of what a manufacturing job could entail.

Bridging the manufacturing gap

To further strengthen manufacturing’s message, the government must also increase its role. As Mayor Emanuel said in his address earlier in the morning, the government must be responsible for producing a healthy platform, which includes infrastructure and education, but that the manufacturers have to take it from there.

Enter Dr. Carolyn Nowinski from the UI Labs Tech Center, a Chicago-based research and commercialization collaborative focused on bringing industries, universities and government together to apply real solutions to tomorrow’s most important business, economic and cultural challenges.

Dr. Nowinski explained in her speech that it’s not just about one company or one university; it has to be a collaboration – hence the birth of UI Labs. The organization defines the challenges of tomorrow by having conversations with the big corporations and schools of today. It then facilitates the creation of partnerships and bringing diverse groups together who share the same issues.

UI Labs came into existence because of the gap between the government and universities and the private sector. Manufacturing had a relationship and ongoing partnerships with the government and universities, but there was a disconnect when it came to the private sector. The goal, therefore, is to train manufacturers to better understand how to gather and use data for performance gains and to improve their speed to market.

All for one and one for all

For Midwesterners, that goal can be better realized by working together – the focus of the afternoon panel. Eric Doden, Reed Hall, Steven Hilfinger and Adam Pollet from the Economic Development Corporations of Indiana, Wisconsin, Michigan and Illinois, respectively, discussed the methods in which states can work together. Steven Koch from the City of Chicago and Richard Longworth from the Chicago Council on Global Affairs as moderator rounded out the panel.

Getting away from the “ticky tack stuff,” like a few percentage points difference in state taxes, the panelists focused on the ups and downs that happen to an entire region – not just to one state. They said that acting together as a region could start with transportation where there are many common interests to pursue.

Because of the huge trade corridor north of the Midwest into Canada, railroads are an asset that can support a stronger region for logistics and supply chain. Furthermore, working on projects, such as quality of water and ports, can be an area for all of the Midwest states to concentrate on.

As the panel discussion – and the event in its entirety – wound down, the statement was made that there are many shared problems in the manufacturing industry. The silver lining, however, is that the tools are changing. From automation to new ideas like eCommerce, there are many opportunities for growth.

Abbe Miller is the marketing manager at NetSphere Strategies, located just outside Chicago. NetSphere Strategies is a boutique eCommerce company positioned to help businesses transform their online presence by providing a full complement of services that starts with our strategic consulting and creative design teams, then continues with building innovative solutions and providing ongoing post-project support.